Kai Johan Jiang answers questions in (Chinese) Auto Business
January 29, 2013 in News
Here is an interesting interview with Kai Johan Jiang, CEO of Statepower group which owns NEVS. The article is translated and published online by ChinaAuto Web (original article here)
1. Why choose Qingdao, Shandong as the Chinese home of Saab?
Jiang: “After the acquisition of Saab, many Chinese cities became interested in me, in Saab. Some in coastal areas sent teams to me, seeking partnership. They made generous offers, including money and tax benefits…When the Qingdao team came, however, they did not start by talking about preferential policies, but their leadership’s ability for innovation, their longing for a local auto industry and plans for the future.”
“Qingdao provides an opportunity for me to help Shandong, where I have my origins, fulfill a dream. I was told that officials of Qingdao for long had a strong interest in sedan-building. At present, the city has a well-developed auto parts industry, serving various vehicle brands based in Europe, America, or Japan. What’s more, before the end of 2012, Qingdao acquired the qualification for having a whole-vehicle import port and completed integrating resources for the new Huangdao District. For Saab looking to create a Chinese production capacity, this is a rare opportunity not to be missed.”
“Shandong province is a leader in the Chinese economy, and yet has no locally-based sedan-making ventures. Qingdao, a key city in Shandong, has tried unsuccessfully before (to set up one). It is not fitting for Shandong and Qingdao, which have advanced economies, not to have a sedan-making capacity.”
“Qingdao is faithfully fulfilling the promises it made in earlier talks with us, which concern setting up a whole-vehicle import port and an economic zone along the west coast. This is the style of the Shandong people. They are reliable, always keeping their word.”
2. What favorable terms did the Qingdao government offer to NEVS?
Jiang: “As this concerns the government, it is not appropriate for me to make long remarks.”
“According to the current, preliminary plan, the factory would be constructed near the port and be easily accessible. The cost and size of the land needed for building the factory is to be determined.”
3. As one of the participants in the Saab project, Qingdao Qingbo Investment Co. Ltd. was previously unknown. It was registered on Jan 7, the very day when the NEVS-Qingdao agreement was signed. Some say that Qingbo paid 2 billion Yuan for 22% of NEVS. Is this true?
Jiang: “It is not wrong to say that Qingbo was established specifically for the Saab project. However, this understanding is partial. Qingbo was formed by the local government of Qingdao and of the Huangdao Economic Development Zone. Yet, it has a greater significance by being a platform that is to help grow various green and innovative enterprises in Qingdao.”
“The figure of 22% is accurate. To be more precise, it was through a capital increase that Qingbo acquired a 22% stake in NEVS. The stake’s price actually exceeded 2 billion Yuan. The exact amount is a commercial secret.”
4. In China, a permit or license from the central government is needed for establishing an automaking venture. Yet, for years the government has no longer awarded new permits, trying to limit the number of automakers in the country. For foreign auto companies attempting to set up production in China, they are required to work with a native that has a permit. How will NEVS get such a permit for its planned Saab factory in Qingdao?
Jiang: “At present, Saab is a foreign company to China, and we indeed do not have a production license. But we will apply for one according to government requirements. We are looking into the feasibility of forming a joint venture with a local company (that has a license).”
“The new government of China attaches great importance to innovation and improving people’s lives. Talking about innovation, if conditions allow, existing conventions may be reformed. And State Power Group Co. Ltd. (a sister company of NEVS and controlled by Jiang) is one of the largest enterprises in China that focus on improving people’s lives. In the last ten years, it created cash incomes of 7 billion Yuan for the country’s nearly 800 million peasants–in direct or indirect ways.”
5. What Saab models will be built in Qingdao? Is the plan to roll out 400,000 Saab cars a year in Qingdao over-ambitious?
Jiang: “Some claim that the 9-3 is outdated. The truth is, since 2005 Saab engineers have continued the R&D based on the 9-3, although for various reasons, we have not fully realized the development results. Thus for me, 9-3 is just a codename. There will be all-new 9-3s in the future.”
“We will soon finish the development of the Phoenix platform. Based on this flexible platform, we will unveil a line of new Saab models.”
“Shandong alone has a market ten times that of Sweden. China as a whole holds much greater potential. With a proper marketing approach, the planned production capacity will be fully matched by demand.”
“We will try to win government procurements and build cars that meet the standard for government-employed vehicles. In particular, we will target government cars, traditional or electric, that have a price tag below 180,000 Yuan and an engine displacement below 1.8L. We will also take aim at taxi fleets in Shandong.”
“Production cost, product quality, and pricing are three crucial factors. Many (who are skeptical about the project) overlooked two things. First, high tariffs and taxes were the fundamental cause of the high pricing of Saabs in China. Second, Saab used to rely on some small parts-suppliers, some of them even serving only Saab; these suppliers were often underfunded on R&D, unable to upgrade their products timely or control costs effectively…. By contrast, there are companies in China that provide excellent parts and services, which really surprised me. Some of them do a better job than their overseas rivals…. If Saab can overhaul its supplier system and employ more local parts, its prices will be lowered to a range attracting ordinary consumers.”
6. According to the terms of acquiring Saab, NEVS can use the name Saab but not the Griffin logo. Will NEVS launch a new Saab logo?
Jiang: “We are in the process of designing a new Saab trademark. It may actually be a good thing to drop the Griffin logo. I am happy not to have it. In the history of Saab Auto, the Griffin logo appeared rather late. It was created after Scania-Saab AB was founded in the 1960s. For Saab, a new visual identify will signify a new beginning. Saab will still be Saab. And the change of logo will make Saab more distinct… The new design will soon be shown to the public.” (The new Saab logo unveiled by NEVS on Jan 14)
7. When another automaker, China Youngman Auto, attempted to buy Saab, General Motors, a previous owner of Saab, pronounced objections to its plan to produce Saabs in China, citing the need to protect technological assets. Will GM do the same thing to NEVS?
Jiang: “I have a high respect for GM. Other automakers can learn much from it. But I haven’t had any significant contact with them. One thing is for sure: GM did not try to stop the Saab transaction because it did not want to see Chinese-made Saabs or someone else to make Saabs with ICEs; rather, GM wanted to hand Saab to the right people. After all, as its former owner, GM has an emotive tie to Saab. GM does not want to see Saab remain on the downward track. Thus, so far, GM has not created any trouble (for NEVS). We have had ‘green lights all the way.’”
8. What’s Jiang’s response to the wide skepticism about NEVS’ plan to save Saab?
Jiang: “I understand that there is a lot of skepticism out there. Some say I am just a show maker, which I am not.”
“Ten years ago, people said I was show-making in promoting the technology that generates electricity through burning crop straws. I spent ten years proving the value of this technology. Similarly, I can use ten years to prove the value of Saab and build Saab into the most successful auto brand. In making the transition, Saab has little burden, with its debts settled and employees compensated. The bankruptcy is more like a challenge, a unique growth opportunity.”
“Since the start of acquisition talks, my hairs have all turned white. You can see the comparison through the photos of me. Before, I had few white hairs.”
BIG Thanx to baas900i for the tip!